Friday, June 28, 2013

Burying Supply Side Economics?

Laurie,
After skimming the article, this one is all yours...  Why should we believe this individual?  Her resume indicates she is about as biased a source as one could find.  Thoughts?

Democracy: Burying Supply Side Economics
Wiki Neera Tanden
Center of American Progress Neera Tanden

More on Supply Side Economics
Wiki Supply Side Economics
About: SSE
Forbes: SSE
VDare: SSE

In Mr Holt's words, it seems she is cherry picking...  Especially when she is trying to draw "causation" in the middle of a rapidly changing world where global competition is changing everything.

I think it may be easy to find some interesting "correlations".  However to prove "causation" seems pretty difficult...

G2A Causation vs Correlation

35 comments:

Laurie said...

Maybe Bruce Bartlett, is a more reliable source for you.

He does a fair bit on economics at the end of this long essay.

Revenge of the Reality-Based Community

He also contributed to the series in Democracy Journal:

National Income: Paying Work, Not Capital

I think our country needs a stronger, more comprehensive economic plan that buy American made products.

John said...

Laurie,
Now help me with this... "plan that buy American made products"

I saw a Prius yesterday with an Obama/Biden 2012 bumper sticker on it and thought of you... How do you see a plan like you describe being implemented?

Maybe a $10,000 tariff on cars that are imported into the country? Of course that would mean your car would cost you $10,000 more. And I am pretty sure the tax would trigger a pretty huge trade war. Thoughts?

I haven't read the links yet... I am changing the oil on my Chevy Cobalt...

John said...

Well I read both of the articles and they were interesting. However I am still left with how do they recommend we fix the problem.

Lots of government enforced wealth transfer?

Laurie said...

I tend not to think of government actions in terms of wealth transfer, although many government policies do require money that must come from somewhere.

For me it boils down to the need for "middle out" economic policies will cause me to continue to vote for democrats at state and congressional level. It seems that the GOP have only 2 economic goals; cut spending and cut taxes, neither of which will be helpful.

I expect next year the legislature will reach agreement about raising the minimum which will help some people at least a little bit.

I think more can be done at the state level as dems are in control and nothing is getting done in DC these days. Maybe I will read through some of the essays again to look for specific ideas, as I can lobby my neighbor, who is a legislative leader, over a beer sometime (though he doesn't really like to talk politics too much while socializing or watching a soccer game.)

Anonymous said...

"It seems that the GOP have only 2 economic goals; cut spending and cut taxes, neither of which will be helpful." -- Laurie

I don't know what school of economics you subscribe to, but I can't imagine how having millions of people making the decisions on how best to spend THEIR money on THEIR needs (aka the free market) is not better than having a few dunderheaded politicians make the decisions for everybody-- one size fits all (socialism). Since the government can't spend one dime that it does not first extract from the economy through taxes, borrowing (future taxes) or inflation (the cruelest tax of all), the only thing that makes real economic sense IS to cut government spending back to just what is essential-- areas where government is providing essential services that only government can provide, or provide most efficiently. [Trust me, that's a very short list.] After that, taxes don't need to be high. They don't need to be "cut," just "right-sized," and they should never be raised arbitrarily, just for the sake of raising taxes, which is the DFL's fundamental operating principle.

John said...

"I tend not to think of government actions in terms of wealth transfer"

How can this be? The typical Liberal is always saying that rates should be raised on the successful / wealthy. And the goverment ought to provide more and more free services and cash for the less successful. How can you not perceive this as wealth transfer? I am truly puzzled.

Laurie said...

the wealth transfer that has been going on for the last 30 years is from the poor and middle class to the top 1%.

Wealth Inequality in America

Taxes slightly mitigate this enormous wealth transfer and are just as legitimate as the free market in affecting how much income a person receives. Nobody "earns" billions of dollars or hundreds of millions.

jerrye92002 said...
This comment has been removed by the author.
jerrye92002 said...

Laurie, I can only conclude that your moral compass is off. Sorry.

Nobody has the right to compel anyone to part with what they have earned, and there is no one who does not earn what they earn, except lottery winners and those who take government handouts. I will say it again: when government takes from one person and gives it to another, that is theft, pure and simple, and the supposed beneficence of intentions-- "helping the poor"-- do not matter.

As for the rich getting richer by stealing from the poor, that's utter nonsense as well, because the poor don't have anything to steal. Besides, how do the rich supposedly "steal" when the government alone has the monopoly on the use of force? If I am in the dairy business, I can't compel that poor Mom to buy milk for her kids, can I? But government can forcibly take from my earnings the money to give her food stamps, in essence giving her my milk for free. She didn't earn it; government didn't produce it and most of it (about 80%) of it got "spilled" along the way, in the form of bureaucratic inefficiency and overhead.

Everybody, except self-inflating liberals in government, would be better off letting me give that poor woman some milk out of the kindness of my heart (not that that's where milk comes from), and I could and would if government didn't step in first and steal it from me.

Laurie said...

free markets were not devised by God and from what the Bible tells us about Jesus he seems more socialist to me. Capitalism is an imperfect economic system. Most countries do more to make it slightly more fair. I believe the US has some of the greatest inequality in the world.

and about the rich stealing from the poor, I describe it as wealth transfer, which is lawful, and probably mostly from the middle class, though the Waltons could choose to pay their Walmart employees more and quit hogging nearly all the increase in income with the other 1%ers.

jerrye92002 said...

Free markets were not designed by God, but free will was, and that drives the free market. Interestingly enough, evolution-- enlightened self-interest-- leads us to the exact same system. I've explained before that there are four kinds of spending, in order of decreasing "efficacy"-- the ability of a process to reach the objective with maximum effectiveness. They are:

First of all is the free market, where you spend your money on what you think most important. It is the most efficacious way of getting exactly what you want or need. You will shop around for exactly the right thing and look for best prices.

Less efficacious is when you spend somebody else's money on yourself. Say your Auntie gives you $40 for your birthday. You will buy something that you might not have bought otherwise (i.e. "blow it") and you aren't going to be as fussy about price, since you didn't have to work for the $40. But neither will you spend more than the $40.

Less efficacious still is to spend
your money on somebody else. (Thank goodness your Auntie was smart enough to give you money.) Here, you are going to watch the dollars, but you probably have no idea what this person really needs or wants. You are likely to spend more because you don't want to appear cheap, and you won't spend the time to search for bargains because, after all, you need to "get something" and go wrap it.

The worst way to spend money is when you spend somebody else's money on a third party. You are handed a hundred bucks and told to go buy a gift for Uncle Ned. Your sole consideration is to spend all of the hundred as quickly as possible, and you don't really care on what. THIS is government spending.

The perfect government would "sell" its services, spending only what we collectively agreed to spend on each particular government service.

You can wrap the issue up in any kind of moral or philosophical or political argument you want, but the fundamental problem with the level of government spending we have now-- let alone total socialism-- is that it is simply contrary to human nature, and it cannot possibly work as well as the free market. Reasonable regulation, certainly, is reasonable, but wealth transfer cannot be a part of it, and what we have now is far past reasonable. This idea that we have to take things away from rich folks to make life "fair" is theft. How else do you describe it? Robin Hood was, after all, a robbin' hood.

John said...

Technically the government is actually quite a bit worse than the Uncle Ned example. I mean they aren't required to spend all the money on Uncle Ned, since they get to keep a large percentage of the money to pay for "expenses"... And the gov't / unions get to set the percent that they pay themselves...

jerrye92002 said...

Hmmm. You are correct. The better example would be, "Here's $100; go buy a present for Uncle Ned, and you can keep the change."

John said...

"the Waltons could choose to pay their Walmart employees more "

Laurie,
I don't disagree that they could, however I am wondering... Do you often choose to pay employees more than is required by the market?

Since Walmart is a publicly held company, the stock value of the company will fall as the profits are reduced. Would that be fair to all the older middle class citizens who have Wal-Mart in their portfolio? Apparently TIAA-CREF alone owns $50,000,000+ in Walmart stock. Imagine all of the other retirees that are counting on companies like Wal-Mart to fund their retirement... Apparently the Kid's only own 51% of the company. Walmart Ownership

By the way, any ideas yet on how to make people "Buy American"? I hung out last week with my Sisters last week who regularly and consistently support Honda, Nissan, Toyota, Samsung, etc.

Laurie said...

the computer ate my long insightful comment which I don't want to rewrite. The short form is if I was in charge of the world I'd raise both the minimum wage and taxes on the rich to put more people to work at a living wage.

I also mentioned that many American cars are now being made inn Mexico where labor is cheap.

Anonymous said...

Good idea, Laurie, but you need to be more specific. I suggest a minimum wage of $100 per hour and a top tax rate of 99%. Now, what do you predict will happen to jobs, business, and the economy?

John said...

Kind of what I was thinking.

Raise the minimum wage and therefore raise the costs of producing products and conducting services in the USA. Therefore encouraging more businesses and people to buy foreign product...

Even if not directly, raising the wages of the McDonald's and Walmart's worker will lead to higher costs everywhere.

And of course raising taxes does tend to encourage people who can to move themselves and their money elsewhere.

And none of this acomplishes the goal of encouraging American citizens to actually Buy American.

Laurie,
What would have convinced you to buy the Volt instead of the Prius?

As I asked you before, if GM outsources everything overseas to low cost countries and cuts their product cost significantly... Then would you buy their "American" product???

Laurie said...

I prefer not to respond to anonymous, stupid, or disrespectful comments, but in this case I will make an exception.

I would raise the minimum wage to $10 per hour and the top tax rate to 50%. I'd also take a look at reducing or eliminating some tax expenditures or exemptions. I think these changes would reduce the unemployment rate as public sector employment could increase.

jerrye92002 said...

Sorry, Laurie, it was not my intent to be anonymous, and my intent wasn't stupid or even facetious. It was a thought experiment. Why NOT $100 per hour and a 99% tax rate? Because whatever your reasons for not taking that admittedly extreme example, they apply equally though to a lesser degree to any other number that you come up with. Now, what are those reasons?

John said...

I must be a shifty character, Blogger keeps putting my comments in moderaation. Check back 3 for my latest...

Laurie said...

about paying my employees- I do pay my son above a fair wage for mowing the lawn (as does his Grandma)

I think If I had a highly successful company I would pay my employees well, but I am sure I will never know.

about buying an American car- I have nothing new to say. I prefer the best value on a car with less environmental impact.

about proper level of taxes and spending in MN - I defer to this writer who knows much more about it than I do.

A competitive Minnesota must spend wisely

John said...

I guess it is then time for more American auto jobs to go overseas to get your car buying dollar...

On the upside there will be more people working for your new recommended minimum wage when their higher paying jobs have been sent somewhere cheaper.

John said...

"Let’s accept that our taxes are about right and that we do indeed need to invest in beneficial public services at the current level. Our focus should be on how Minnesota can be more productive in all of its sectors — not only public, but nonprofit and private as well."

This quote from your own source... Apparently taxes are okay, now let's start making the Public sector more effective... Wouldn't that mean they need to do more with the same funding ???

Laurie said...

my views are not completely predictable. When I wrote that I would raise taxes I had in mind the federal level. As we are already a high tax state I don't think it would be wise to become a major outlier with the highest taxes.

When compared with the rest of the developed world, however, we are a low tax country, with clear needs that could be funded with additional revenue.

John said...

Do you have any good links that show how "under taxed" we are.

With total tax revenue equaling 40+% of GDP, (ie local, state & federal) I would be interested in seeing what you see as a good goal.

Laurie said...

the source I found with my 20 second search shows our taxes are 27% of GDP and 25% below the average of developed countries.

How Low Are U.S. Taxes Compared to Other Countries?

I would not raise taxes across the board 25%, but I think we clearly have some room for further increases. Oh, and have I mentioned that I would try to target these taxes primarily at high income people?

jerrye92002 said...

You get a whole different answer if you look at corporate tax rates.

http://taxfoundation.org/article/countdown-1-2011-marks-20th-year-us-corporate-tax-rate-higher-oecd-average

And we don't necessarily need all these numbers. Just look where corporations, jobs, capital and rich folks are moving to. And it isn't to the US. The old adage still holds true. You get less of what you tax, and more of what you subsidize. Taxing rich people to subsidize the poor is counterproductive, every day of the week.

John said...

Jerry's Link
Corporate rate higher


Laurie,
I think your info just discusses the "Federal" revenues, and seems to forget that we pay just as much in Local and State taxes...
Total Gov't Spend

Since many of the European countries are as small as our states. I am thinking there are some incorrect comparisons occuring. (ie apples and oranges)

Unless of course you think the Federal spend is all that matters...

Laurie said...

It's funny how people tend to stick
to their views even when given contradictory information. The link I provided included this statement:

"U.S. taxes are low relative to those in other developed countries. In 2008 U.S. taxes at all levels of government claimed 26 percent of GDP, compared with an average of 35 percent of GDP for the 33 member countries of the Organization for Economic Co-operation and Development (OECD)."

The OECD and the Tax Policy Center affliated with the Brookings Institution seem like reliable sources to me. The bottom line is the USA is a relatively low tax country.

We may spend near 40% of our GDP but our taxes are much lower than our spending.

John said...

You do raise a good point, we have been spending more than we have been taxing. I think that would take the "revenue/taxes" down to ~35% of the GDP. So apparently the 2 sources have a difference of opinion.

One question, why is the 2013 Atlantic article using data from 2008? Is this use of old data significant/biased?

Another, how many of those other countries have national one payer healthcare? Of course they need a higher tax rate if they do. I am pretty sure if we add all of our healthcare premiums to the total tax bill, we would be getting close or higher. We pay our medical premiums outside of the taxes so our tax rate should be lower.

Again... Apples vs oranges unless you are a supporter of socialized/ one payer healthcare in the USA. Then I suppose you would like those premiums sent to the government, thus raising our taxes.

Laurie said...

" I think that would take the revenue/taxes down to ~35% of the GDP."

do you just pick these numbers out of thin air? Maybe the graph shows data from 2008 because this level of expert analysis is not completed every year.

also your healthcare argument is sort of weak too, because more than half of healthcare expenses in the USA are paid for by the govt (and that is high cost care)

I think one reason our taxes are low when looked at as a % of GDP is because our GDP is so high. We are a rich country that can afford to have high quality roads, bridges, airports etc.

John said...

Now that hurts... I started at ~40% and subtracted our ~25% deficit spending. But yes it is just an estimate.

Any numbers to backup the over half comment?

If we are a "rich country" with a large GDP, then why would we want to match their % of GDP spend? Should a millionaire spend as much percentage wise on base life costs as somone in poverty?

jerrye92002 said...

Ah. You raise an interesting question. How is it that our GDP GOT so high? WHY are we the richest country in the world? Is it because we have always had one of the highest corporate tax rates in the world? Is it because government regulations have made us a Mecca for private capital?

Laurie said...

John,

I thought you had the skills to do your own searches for info you're curious about. This one took me 7 seconds:

Gov't to Pay More Than Half of U.S. Health Costs

about our high GDP- it seems the amount of taxes and regulation we have in the USA is not a significant drag on our economy. It also seems that the sensible question in considering whether our taxes should be raised or lowered is consider the needs of the country. As I mentioned I believe we have unfunded needs (roads bridges, well maintained schools, etc.)

jerrye92002 said...

Laurie, a question if I may? I agree that the federal government currently pays more than half of all health care costs. I have complained for years that the reason our health care costs are so high already is a RESULT of that fact! The "model" of government healthcare – fee-for-service, first dollar coverage, third-party payer – have become the norm for all of our health care, when getting rid of those three things would reduce costs by half! In other words, the best healthcare reform is to get the government OUT of the healthcare marketplace, not further in.

What I hear you saying is that you trust a bunch of politicians in Washington DC to make all your decisions – and all of MY decisions as well. Right? That is what progressive government does; it imposes one-size-fits-all solution on everybody. When the federal government took over General Motors, I half expected the next Act of Congress to be that every American citizen was required to buy a new Chevy Volt, and that the IRS would levy a huge tax on those who did not. I mean, if they can do it for Obama care… The fact that almost nobody voluntarily chose to buy a Chevy Volt tells you that having the government make decisions rather than the free market is a very, very, very bad idea.